Member Articles

Our Reports on Stocks in the Internet Content and Catalog Retail Industry

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Image Source: Robert Scoble Structure of the Internet & Catalog Retail Industry The Internet and catalog retail industry benefits as a whole from the secular trend toward consumer digital (online) consumption. The industry consists of a number of exclusive online retailers led by Amazon and businesses that offer Internet travel services such as Booking Holdings, formerly Priceline. Online auctions are dominated by eBay, and the firm benefits from both a buyer-seller driven network effect and secular online consumption growth. The industry generates high returns on investment due to minimal capital costs, but the landscape will be vastly different in the decades ahead. Still, we like the group. We’ve optimized our tehnology coverage. To access the reports, please select here.

Our Reports on Stocks in the Containers & Packaging Industry

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Image: In 2015, Ball Corp started making Coca-Cola’s contour-shaped aluminum bottle in the US; source: Ball Corp. Structure of the Containers & Packaging Industry Firms in the containers and packaging industry are highly competitive and operate capital intensive businesses characterized by facilities that run continuously to remain profitable. Firms are exposed to the costs of aluminum, steel and other materials, though many can pass through price changes thanks to contractual provisions. Still, cost containment is critical, as increases in productivity, combined with capacity changes, can create significant pricing pressures. Metal, plastic, glass and flexible materials are essentially substitutes, and differentiation can be difficult to achieve. We’re generally neutral on the group. We’ve dropped coverage of stocks in the Containers & Packaging … Read more

Nostalgia?

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Valuentum’s November Dividend Growth Newsletter! Image shown: Valuentum’s Dividend Growth Newsletter portfolio. Since inception, the newsletter portfolio has *never* had a constituent that experienced a dividend cut. We moved to weighting ranges beginning in 2018.— Today is Dividend Growth Newsletter day!  — As I think back over the many years we’ve managed the Dividend Growth Newsletter portfolio, it has been an incredibly rewarding experience to be able to help so many dividend growth investors, not only in finding big winners, but also in avoiding big losers. If you recall, many dividend growth investors were swept away by the MLP craze years ago, and we saved our membership, perhaps in impeccable fashion. Who remembers? — From “getting out” of General Electric … Read more

Our Reports on Stocks in the Retail–Apparel (Teen-30yrs, Off-Price, Outdoor) Industry

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Structure of the Retail–Apparel Industry The specialty apparel industry is highly competitive. Firms compete with various individual and chain specialty stores, as well as casual apparel sections of department stores and discount retailers. Identifying and responding to fashion trends remains key, and business fluctuates with changes in the economy and customer preferences. Fashion missteps can result in lower sales, excess inventories, and higher markdowns, which can severely impact profits. Improving productivity, managing new store growth and developing new brand concepts are critical for long-term success. We’re neutral on the group. We’ve dropped coverage of stocks in the Retail–Apparel (Teen-30yrs, Off-Price, Outdoor) industry.

General Motors’ Cost Savings Plan Still Intact

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Image Shown: Shares of General Motors moved higher after its third quarter 2019 earnings report as investors looked past the UAW strike and towards the future, particularly ongoing cost structure improvements. By Callum Turcan General Motors (GM), a holding in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios, reported third quarter 2019 earnings on October 29. As expected, its results were held down by the UAW strike in the US, which stretched from late in the third quarter (two weeks in September) to early in the fourth quarter (roughly four weeks in October). Please note that General Motors’ fourth quarter performance will also get dinged over the strike. Both sides came together and agreed to a new four-year … Read more

Our Reports on Stocks in the Food Products (Large/Mid-Cap) Industry

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Structure of the Food Products Industry The food products industry is composed of a number of firms with strong brand names. However, market supply/demand dynamics and intense competition still impact product prices, while fluctuations in commodity costs can make earnings quite volatile. Private-label competition, competitors’ promotional spending, and changing consumer preferences often drive demand trends. The group’s customers—such as supermarkets, warehouses, and food distributors—continue to consolidate, increasing buying power over constituents and hurting margins. Still, we’re generally neutral on the group. We’ve reallocated our resources to cover more recession-resistant stocks. See here.

Tech Earnings Roundup: AAPL, FB, GOOG

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By Callum Turcan Several large tech companies reported earnings this week including three of the top holdings in our Best Ideas Newsletter and Dividend Growth Newsletter portfolios. Apple On October 30, Apple Inc (AAPL) reported fourth quarter earnings for fiscal 2019 (three month period ended September 28) that saw GAAP revenues shift higher by 2% versus the same period last year, hitting $64.0 billion. Its services revenues jumped up by 18% year-over-year while its products revenues declined by a bit over 1% year-over-year, highlighting Apple’s focus on higher margin services sales opportunities. Even so, Apple’s GAAP gross margin fell by over 30 basis points year-over-year due in part to the negative impact of the US-China trade war on top of … Read more

Johnson & Johnson Announces New Test Results That Reveal No Traces of Asbestos in Johnson Baby Powder Products

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Image Source: Johnson & Johnson – February 2019 CAGNY IR Presentation By Callum Turcan A holding in both our Dividend Growth Newsletter and Best Ideas Newsletter portfolios, shares of Johnson & Johnson (JNJ) have been on a wild ride of late over dueling narratives regarding the firm’s potential legal liabilities. In particular, liabilities concerning its talc-based Johnson Baby Powder product. On October 18, Johnson & Johnson announced it was voluntarily recalling “a single lot” of its Johnson Baby Powder product (equal to around 33,000 bottles) after the US FDA found sub-traces of chrysotile asbestos in a single bottle (less than 0.00002%). At the time, Johnson & Johnson vigorously defended its baby care brand and said that its Johnson Baby Powder … Read more

Caterpillar Misses Estimates and Revises Guidance Downwards

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Image Source: Caterpillar Inc – Third quarter 2019 IR presentation By Callum Turcan On October 23, Caterpillar Inc (CAT) posted third-quarter 2019 earnings with both its top- and bottom-line performance falling well short of consensus expectations. Furthermore, management revised the firm’s adjusted (non-GAAP) EPS guidance for 2019 down to $10.90-$11.40 from $12.06-$13.06 previously, quite the reduction. Please note this represents Caterpillar’s second earnings guidance reduction so far this year. Caterpillar’s weak performance is about much more than just the industrial equipment supplier, it speaks unfavorably to the state of the global industrial economy. Our fair value estimate for Caterpillar stands at $156 per share, and shares of CAT yield 2.9% as of this writing. Revenue Growth Disappearing Management has adjusted … Read more

Waste Management’s Dividend Well-Covered with Free Cash Flow

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Image Source: david.dames  By Brian Nelson, CFA We continue to be huge fans of the garbage-collection business. In fact, we cannot remember a time when we didn’t like the waste collection space. The group benefits from a relatively recession-resistant pick-up operation, and transfer and disposal assets that simply demand pricing power. The trash-taking industry is also notorious for its free-cash-flow generating prowess, and we don’t think that will ever change. The latest data point as it relates to the health of the waste industry, and perhaps the general economy as well, came with Waste Management’s (WM) third-quarter results, released October 23. The company’s revenue advanced 3.8% thanks in part to strong all-in organic sales expansion in its collection and disposal … Read more